Hot Temps Blamed For Cool Retail Sales; But Some Stores Did Well Anyway

USA TODAY - October 12, 2007 –

September sales were generally slow, although a few retailers bucked that trend.

Where sales were sluggish compared with a year ago, fingers were pointed at unseasonably hot weather, the credit crunch and the slow housing market.

During the second half of September, sales slowed at retailers in the Northeast, Midwest and Mid-Atlantic, where balmy weather meant sweaters and fleece remained on shelves, says retail analyst Christine Chen at Needham & Co.

"Warm weather no doubt explains part of the chill in September sales, but shoppers are also clearly telling us they want to hold the line on spending," says Frank Badillo, senior economist for TNS Retail Forward. "That was the case for back-to-school spending, and shoppers are also cutting their plans for Halloween and the holidays."

Still, some retailers -- including some not dependent on apparel -- reported gains. Sales were up 6% at Costco, 5% at CVS and 4.7% at Walgreen.

High-end retailers continued to do well. Saks posted a 7.7% increase over last September, while Neiman Marcus was up 6%.

What was bad news for some retailers may be good news for shoppers. As they brace for a tough holiday sales season, retailers are already stepping up their promotions. Vikram Sharma, CEO of ShopLocal, which tracks retail advertising in newspaper circulars, says there's already an early uptick in discounting.

"There's a push-pull and tug of war, with consumers saying, 'Maybe I'll wait a little bit,' and retailers saying, 'Let's do it now,'" says Sharma, whose company puts circular promotions on retailers' websites and its own, ShopLocal.com. "Retailers want to get the activity started in terms of promotions."

Wal-Mart, which had a lower-than-expected sales increase of 1.4%, cut prices on many toys last week. L.L. Bean, which does not release sales figures, announced last week that it would offer free shipping on all orders through Dec.21 with no minimum purchase required.

"Things that are out of their control," such as the weather, can move retailers' sales from one month to another, says Ken Nisch, chairman of the retail design and brand consulting firm JGA. "But in the long term it should even out."

Some retailers have begun displaying holiday merchandise even earlier this year, compounding problems, Nisch says.

"Anything seasonal is impacted by the weather," he says. "It's not just, 'Is that sweater too warm?' it's that it has a Santa Claus on it."